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The Commercial General Liability Policy (CGL) provides coverage for bodily injury to a person or damage to the property of others caused by a company's negligence. The CGL offers broad coverage and peace of mind. Take a moment to read your CGL policy language in your insuring agreement, the heart of your policy. "We will pay those sums that the insured becomes legally obligated to pay as compensatory damages because of ‘bodily injury' or ‘property damage' to which this insurance applies." But in addition to bodily injury and property damage, the CGL covers personal injury liability, including libel and slander, as well as advertising injury, a very important addition for many businesses.

Courts have repeatedly ruled that the CGL policy is not a performance bond. A CGL policy does not cover the quality of a company's advice or services. This helps prevent a business owner from low bidding a job and performing poorly, relying on an insurance carrier to assume that risk.

Here are a few of the many business exposures covered under the CGL.

  • Additional insured coverage when you sign agreements or contracts - ONLY IF NAMED AS ADDITIONAL INSURED ON POLICY
  • Premises and operations liability for persons injured or items damaged while on your premises or due to your business operations.
  • Tenant's liability in the event you damage someone else's property, for example accidentally start a fire in rented premises - FOR STATED AMOUNT ON POLOICY - USUALLY $50,000 OR $100,000
  • Liquor liability if you are not in the liquor business.
  • A legal defense for covered claims.
  • Pays bonds and court courts associated with a claim.
  • Offers limited financial remuneration when assisting the carrier in the defense of a claim.

What are some CGL exclusions?

There are exclusions under the CGL, but understanding each one is tricky. Forms differ and different jurisdictions render very diverse opinions. However, here are some general exclusions.

  • Intentional injury is excluded. There is generally coverage if you act in self defense.
  • Loss due to property owned by others in your care, custody and control is excluded. If you repair equipment like computers, additional bailee coverage may be needed.
  • Faulty workmanship is excluded.
  • Liability arising from an aircraft, auto or watercraft is excluded. However, entrusting an automobile to a negligent employee may trigger coverage, depending on the coverage form and the jurisdiction.
  • Perhaps most importantly, the CGL excludes losses arising out of your employees' injuries.

While the CGL policy offers broad coverage, it may not protect all your company's unique exposures. As your business grows, the CGL is only part of your coverage solution. The CGL will not cover every exposure you face, especially once you hire employees. Call us today to review your coverages with a knowledgeable agent.

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